Tulsa World: Judge says SemGroup power struggle stays in Delaware

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Judge says SemGroup power struggle stays in Delaware

The South Campus entrance of SemGroup back in 2008. Stephen Pingry/ Tulsa World File

By ROD WALTON World Staff Writer
Published: 4/23/2009 12:13 PM
Last Modified: 4/23/2009 2:15 PM

Complete coverage: Read all the stories and documents related to the SemGroup collapse.

The judge overseeing SemGroup LP’s Chapter 11 bankruptcy in Delaware ruled Thursday that the lawsuits pitting would-be bidder John Catsimatidis and his group against CEO Terry Ronan and other executives deserve to be heard in a Wilmington, Del., courtroom instead of Tulsa.

The judge also approved the sale of SemMaterials residual fuel assets to a Louisiana company.

U.S. Bankruptcy Judge Brendan L. Shannon did not rule on the merits and allegations in the dueling lawsuits between Catsimatidis and Ronan. The decision, for now, eliminates the Tulsa case filed by Catsimatidis and consolidates it in Delaware.

“We appreciate Judge Shannon’s thoughtful decision and we look forward to continuing our reorganization process,” SemGroup spokesman Tom Becker said.

Catsimatidis’ group could not say Thursday whether they would appeal Shannon’s ruling. The complaints in each lawsuit are scheduled for a May 28 hearing in Wilmington.

“For the moment, that’s where things stand,” Catsimatidis spokesman Gerald McKelvey said. “Let’s talk to the lawyers; that’s what you do when you get a ruling like this.”

SemGroup LP sued Catsimatidis in February, alleging that he violated a confidential agreement and has a conflict of interest in trying to buy the company and

also lead it through reorganization.

Catsimatidis and his fellow members of the SemGroup management committee shot back by filing an April 2 lawsuit against Ronan in Tulsa federal court. The suit alleges that Ronan has tried to block the management committee from its rightful actions in running the company.

Attorneys for both sides argued about the proper venue for the lawsuit Thursday.

SemGroup lawyers pointed out that the Delaware case was filed first and is more pertinent to the bankruptcy proceeding, while Catsimatidis’ group has noted that the management committee is a Tulsa entity.

Catsimatidis took control of five of nine management committee seats late last year.

However, he has been unable to put a reorganization plan forward and was unsuccessful in a bid to buy the SemMaterials asphalt unit earlier this year.

Ronan previously said he welcomed the New Yorker’s interest in saving SemGroup but that any reorganization plan must work with court-approved financial consultants, day-to-day executive leaders, the judge and creditors. No plan can favor one interested party over another, he added.

Catsimatidis said he wants to keep SemGroup intact and operating in Tulsa. In the 1980s, he led the reorganization of United Refining Co. out of Chapter 11 bankruptcy.

Ruston, La.-based Davison Petroleum Supply LLC can move forward to purchase SemMaterials’ residual fuels inventory, storage and terminal agreements in Sunshine, La., Shannon ruled Thursday. Davison and SemGroup came to terms several weeks ago, and no other bidders emerged, according to reports.

SemGroup planned to liquidate its SemMaterials asphalt unit due to $15 million in monthly losses. Some of the SemMaterials storage assets were transferred to public subsidiary SemGroup Energy Partners as part of a settlement deal, while another group affiliated with SemGroup investor Thane Ritchie and former SemMaterials president Frank Panzer wants to buy the branded road surface technologies for about $6.5 million.

By ROD WALTON World Staff Writer

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Reader comments for this story have been moved to the most updated version of the story, now under the headline "SemGroup judge rules to move lawsuits," which was published on 4/24/2009. So far, 2 comments have been made.